Burr & Forman

01.5.2017   |   Blog Articles, FINRA, Securities Litigation

FINRA’s 2017 Regulatory & Exam Priorities

On January 4, new President and CEO Richard Cook issued FINRA’s Annual Regulatory and Examination Priorities Letter. This year’s list in summary is:

New for 2017:

Targeted electronic off-site reviews “on select firms not scheduled for cycle exams.”
An annual summary report of key exam findings on selected issues
More resources for small firms, including:
– Compliance calendar;
– Compliance service provide directory.

High-Risk / Recidivist Brokers

Dedicated exam group
Supervisory procedures and due-diligence
Branch inspections

Sales Practices

Seniors: fraud and abuse; complex products; microcap pump-and-dump
Suitability & Concentration: interest-rate risk; ETPs, non-traded REITs
Churning Long-term Products: mutual funds, UITs, Vas
OBA & Private Securities Transactions
Social Media & ESI Retention / Supervision

Financial Risks

Liquidity Risk: firms’ liquidity risk management plans (Reg. Notice 15-33).
Financial Risk Management
Credit Risk: Rule 4210 – margin on covered agency trades

Operational Risks

Cybersecurity: risk mitigation programs, especially branch office controls and WORM document retention
Supervisory Controls Testing
Customer Protection and Asset Segregation
Reg. SHO: good locate and closing out fails
AML: automated process deficiencies; dedicated surveillance
MA Registration: proper registration and examination

Market Integrity

Manipulation: Big data to detect layering and spoofing
Best Execution: Reg. Notice 15-46
Audit Trail Reporting: responding promptly to early remediation reports
Tick Size Pilot
Market Access Rule compliance
Trading Exams: alternative trading systems disclosures
Fixed Income surveillance

The letter is here.


Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Tom is licensed in Tennessee, Texas and Louisiana. He has over 30 years’ experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile.

© 2017 by Thomas K. Potter, III (all rights reserved).

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